“Rising real mortgage rates and zero Y/Y growth in real average hourly earnings is not what builds strong housing markets,” wrote Steven Blitz, chief U.S. economist for TS Lombard, after the release of the new-home sales data Thursday.
“While we are upbeat about wages in the coming year, as wage growth is a lagging indicator, 10-year Treasury yields (the price basis for mortgages) are not dropping off anytime soon,” Blitz added. “With a large budget deficit to fund and the Fed far from shifting to an easing trajectory, the only direction for the real cost of money is up.”
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